Santa Margherita Syndrome

Many articles have appeared recently advising wine consumers on “trading down” strategies for the recession — where to find the best values and bargains as the market slump continues. (Thanks to my crack team of research assistants — Michael, David and Tom — for your tips on this topic.)

6. Never order Santa Margherita Pinot Grigio. We don’t mean to pick on Santa Margherita. We know many people like it and that’s fine. But because so many people like it, it is routinely one of the most outrageously priced wines on the list.

Nothing personal, Dottie and John said, it’s just supply and demand plus a certain bandwagon effect that seems to afflict wine drinkers when confronted with a complicated and uncertain set of choices.

We note it here only as a classic example of this: If you stay within your comfort zone, ordering only wines you already know, you will be punished for it, price-wise. In addition, no wine is going to seem like a good value to you when you know you could buy it at a local store for half the price or less. That’s why it’s so important to focus on labels or kinds of wines that you wouldn’t otherwise see. … Remember: There is value in tasting something new.

Sensible advice, although not always easy advice to follow in practice given the high cost of restaurant wine. Everyone wants to find that delightful unexpected bargain, but no one really likes paying the bill for a wine experiment that disappoints. So restaurants and wine consumers alike seem to find themselves drawn to a small set of “usual suspects.”

Demand and Supply

Wine & Spirits magazine surveys restaurants each year to try to discover trends both in general and in specific segments of the market. This year’s poll (see the April 2009 issue) provides early data on how the recession is affecting wine sales and some of the strategies that restaurants are trying to deal with this increasingly serious problem.

W&S provides a lot of information about what successful restaurants are doing to cope with the weak economy. One unexpected implication of the survey seems to be this:

Always try to sell customers Santa Margherita Pinto Grigio.

The W&S editors do not advise this, of course (they are very careful in this regard — they just report the findings); it just seems to be restaurant conventional wisdom.

W&S asks restaurants to identify the wines that they offer by the bottle or serve by the glass and then publishes the names of the most-reported products. The most listed wine-by-the-glass, for example, is Sonoma-Cutrer Russian River Chardonnay (11.1 responses per 100 restaurant replies), which sold for an average price of $12.67 per glass in 2008. Santa Margherita Pinot Grigio was #6 on the list (number six again … spooky), reported by 6.7 per 100 restaurants. It sold for an average price of $14.40 per glass in 2008.

A quick internet search reveals that Santa Margherita often sells for around $20 per bottle retail, which suggests a wholesale price of $14-$15 — suspiciously close to the $14.40 average per glass tariff. You can begin to see why it would be a popular restaurant choice. And why Dottie and John’s number one rule is …

1. Skip wine by the glass. Restaurateurs like to make enough on a single glass to pay for a whole bottle, which is great for them but not so great for you.

W&S lists Santa Margherita as the number one wine in both the Pinot Gris/Pinot Grigio and the Italian wine categories. The average per bottle restaurant price was $52, which indicates a somewhat higher mark up over wholesale than the usual restaurant rule of thumb. All of which makes me think that wine consumers need to become a bit better educated about wine economics because it is pretty plain that restaurants have been hitting the books on how to use demand and supply to preserve profit in these unsettled economic times.

What Should I Order?

So where are the values on restaurant wine lists? The simple answer is that there is no simple answer (apart from Dottie and John’s good advice). The W&S poll asked restaurants to list wines under $25 per bottle and the most frequent response was Cooperidge White Zin and Chardonnay, $24 average price. Cooperidge is a Gallo restaurant brand. Interestingly, it appeared in just 1.9 per 100 responses.

No very strong conclusions can be drawn from this data but they do suggest that (1) there is no one wine or brand that restaurants consistently go to for the value-seeking customers, so you will have to explore the wine list carefully to find what you are looking for, but (2) it might be smart to include Washington State wines in your treasure hunt.

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One response

This is one of the most gross and ugly scenarios that exists in the American culinary scene today: if you can’t make money on your patrons with your food, then gouge and pillage your customers on wine prices. I’m being nice with my word choice.

Like all of us, I have heard the arguments about why a restaurant has to charge two or three, or more, times retail for their wines. They have to buy it and store it thus incurring inventory costs, they have to wash wine glasses, they have to pay for wine service, they have to . . . PLEASE!

In Austin, Mirabelle Restaurant is consistently one of the best and busiest food establishments I know of, due to the fact that: a. dishes are created around the wine, as opposed to trying to find the wine to pair with the menu; b. one of the owners, Michael Vilim, is a wine maniac, and he really knows wine (he’s also a sommelier, sits on the Board of the Food & Wine Association, etc); c. every single wine on the menu is excellent; and d. every wine is priced at, or close to, local retail prices. Also the food is truly excellent. What is wrong with this business strategy? Nothing!

It does not matter what time of day or night or what day of the week, this restaurant is always busy! So why would a restaurateur attempt to continue operating with a very outdated business model? Before there was competition, restaurants could get away with charging two or three or more times retail for a bottle of wine. And as our consumer population becomes more educated, it is ever less acceptable for restaurants to continue with this practice and is beginning to show itself publicly in the form of an outcry from people that love wine.

The other effect of gouging is that restaurants often must have rather poor quality wines on their menus just to have some ‘reasonably priced’ selections available. So as a consumer, you may see the equivalent of a bottle of Yellow Tail on the menu for $30 that you just saw at the grocery store for $8. Would you really spend $30 for a bottle of wine you know will not be enjoyable? Most people won’t. And if you get into the $150 range, you can probably find something decent but you know that you could buy two or three bottles to take home for the same price. The math just doesn’t add up any way it’s looked at.

Wine service is another sore spot, not only with me, but apparently thousands of others according to Wine Spectator’s survey on the subject last year. I have had numerous quantities of numb sommeliers (and to be fair, a few good ones, but mostly in the Big Apple), many too young to have a clue that ‘61 was an incredible vintage for Bordeaux, yet alone anyone that has tasted great and classic wines – sadly, sommeliers can rarely afford to drink fine wine so like retailers, they just have to schlep the wines that will put the largest amount of bucks into their accounts. I don’t blame anyone for wanting to line their own pockets, but it is a fleecing of the unsuspecting populace that I object to. I whole-heartedly agree that consumers will fare much better by becoming educated about wine – almost across the board, restaurant wine lists are for suckers.

I’m all for exploring new wines – it is practically a second career for me but ultimately the very best value in restaurant wine is to just pay the bloody corkage fee and bring something you know you like.

The Wine Economist

What would you get if you crossed the Wine Spectator, America's best-selling wine magazine, with the Economist, the world's leading business weekly? The answer is this blog, The Wine Economist, which analyzes and interprets today's global wine markets. The Wine Economist was named 2015 "Best in the World" wine blog by Gourmand International. Staff: Mike Veseth (editor-in-chief) & Sue Veseth (contributing editor).